Daily Investment Interpretations

August 6, 2010

2010-8-6:  The markets fell a little more today on another disappointing jobs report: U.S. sheds 131,000 jobs, 71,000 more [private sector] jobs not enough to dent unemployment rate, and Millions have simply given up. The U. S. needs to add between 100,000 and 125,000 new jobs a month to keep up with population growth. The total unemployment rate didn't rise, but only because so many people have given up, or have run out of unemployment compensation benefits. Not all economists are pessimistic:2 Top Economists Differ Sharply on Risk of Deflation. However, the yield on 10-year Treasury bonds, which fell below 3% a few weeks ago, closed today at 2.83%:  Treasury yields touch lows. (Of course, Treasury-bond yields are a function of supply-and-demand, and can change quickly.)
    A chilling picture of what long-term deflation and stagnation can do is afforded in this article: Japan's Economic Stagnation is Creating a Nation of Lost Youths.
    The only upbeat news today comes from mark Hulbert who observes that the third year in a presidential cycle is always an up year (but it's important to remember that many or most of these "always" rules are based upon the past 60 years of Fed-controlled recessions).